The Issue Whether proposed Rule 59G-6.0102 is an invalid exercise of delegated legislative authority pursuant to Section 120.52(8), Florida Statutes,1/ for the reasons described by Petitioners in their Petition.
Findings Of Fact Stipulated Facts The Agency is responsible for administering the Medicaid program consistent with state and federal laws. Medicaid reimbursements to nursing homes are set by AHCA as directed by the Florida Legislature pursuant to statute and the appropriations act. The State of Florida has approximately 675 nursing homes. Approximately 645 of those nursing homes have Medicaid rates set. AHCA establishes a payment methodology that is described in a document called the Florida Title XIX Long Term Care Reimbursement Plan (the Reimbursement Plan). The Reimbursement Plan is incorporated by reference into Florida Administrative Code Rule 59G-6.010. AHCA has proposed a change to the Reimbursement Plan relating to rate reductions, regarding implementation of the appropriations act from the 2007 special session. That change is the subject of this dispute. The procedural aspects of the rulemaking process of proposed rule 59G-6.010 are not at issue in this proceeding. With respect to legislative appropriations for funding of nursing home rates, there can be a distinction between the appropriated amount of funds and actual expenditures based upon nursing home cost reports. The appropriated amount is typically based upon the projected reimbursements for nursing homes by estimating the anticipated per diem rates and the annual bed days or patient days. In the 2007 special session, AHCA was mandated by the Florida Legislature to make a reduction as is set forth in the 2007 Special Session Appropriations Act at item 116. Specific appropriation 116 reads as follows: MEDICAID LONG TERM CARE 116 SPECIAL CATEGORIES NURSING HOME CARE FROM GENERAL REVENUE FUND -68,679,773 FROM MEDICAL CARE TRUST FUND -90,647,696 The reduced appropriation in Specific Appropriation 116 includes reductions of $16,198,032 from the General Revenue Fund and $21,393,131 from the Medical Care Trust Fund as a result of modifying the reimbursement for nursing home rates, effective January 1, 2008. The agency shall modify the Medicaid trend adjustment contained in the Title XIX Nursing Home Reimbursement Plan to achieve this recurring reduction. The reduced appropriation in Specific Appropriation 116 includes reductions of $4,823,045 from the General Revenue Fund and $6,369,912 from the Medical Care Trust Fund as a result of expanding the Nursing Home Diversion Program, effective January 1, 2008. The reduced appropriation in Specific Appropriation 116 includes reductions of $47,658,696 from the General Revenue Fund and $62,884,653 from the Medical Care Trust Fund based on the revised Fiscal Year 2007-2008 nursing care expenditure estimate provided in the September 14, 2007 Medicaid Impact Conference.2/ (emphasis supplied) In the Prehearing Stipulation, the parties describe the nature of the controversy as follows: The issue to be decided is whether legislatively mandated nursing home reimbursement reductions should be effectuated using a methodology that employs a cut directly from actual rates based upon cost reports and projected from estimated bed days or whether the methodology should employ the cut from the appropriated amount (requiring a rate reduction only to the extent required to contain costs at the appropriated amount less the amount of mandated reduction). The Joint Administrative Procedures Committee is prepared to certify the rule amendment to the Bureau of Administrative Code. The Centers for Medicare and Medicaid Services, the federal oversight agency for the Medicaid program, has approved the changes to the Reimbursement Plan. Facts Based Upon the Evidence of Record Standing Petitioner, Florida Health Care Association (FHCA), is a trade association representing approximately 500 nursing homes in the state of Florida. Most if not all of its members participate in the Medicaid program. Petitioner, Florida Association of Homes and Services for the Aging (FAHSA) is a trade association representing primarily not-for-profit facilities, including approximately 100 nursing home members, 90 to 95 of which participate in the Medicaid program. There are approximately 82,000 beds or spaces available for residents of a nursing home, in licensed facilities in Florida. Approximately 72,000 beds are typically occupied at any point in time, approximately 43,000 of which are occupied by Medicaid recipients. A "per diem rate" is the amount of money that Medicaid pays a nursing home for each recipient on a daily basis. Medicaid reimbursements are made to nursing homes based upon cost reports submitted by the nursing homes reflecting their costs over time. The cost reports are submitted and adjusted twice a year, in January and July. Each nursing home provider has its own specific rate. The Agency establishes the rate at which each provider is reimbursed based upon cost components, the largest of which is the direct patient care component. The resulting rate is then adjusted, by rate-setting calculations. Petitioners and their members will be substantially affected by the proposed rule. The Proposed Rule The text of the proposed rule reads as follows: 59G-6.010 –Payment Methodology for Nursing Home Services.-- Reimbursement to participating nursing homes for services provided shall be in accordance with the Florida Title XIX Long-Term Care Reimbursement Plan, Version XXXIII, Effective Date January 1, 2008 and incorporated herein by reference. A copy of the Plan as revised may be obtained by writing to the Deputy Secretary for Medicaid, 2727 Mahan Drive, Mail Stop 8, Tallahassee, Florida 32308. The Plan Incorporates Provider Reimbursement Manual (CMS Pub. 15-1). The Florida Title XIX Long-Term Care Reimbursement Plan, Version XXXIII reads in pertinent part as follows: Effective July 1, 2004, through June 30, 2005, each component of a nursing home rate, except for the direct care component, shall be reduced proportionately until an aggregate total estimated savings of $66,689,094 is achieved. Effective July 1, 2005, a proportional reimbursement rate reduction shall be established until an annual aggregate total estimated savings of $132,096,875 is achieved for the period ending June 30, 2006. The weighted average per diem rates as of July 1, 2005, and January 1, 2006, shall be the bases for the determination of these savings, and shall be compared to the weighted average per diem as of June 30, 2005, with a .5% increase. The full savings will be assumed realized if the weighted average rate for the period July 1, 2005, through June 30, 2006, does not exceed the weighted average rate of June 30, 2005, with a .5% increase. Effective July 1, 2006, the annual aggregate amount the rates were reduced during the period July 1, 2005 through July 30, 2006, shall become a recurring annual reduction. This recurring reduction, called the Medicaid Trend Adjustment, shall be applied proportionally to all rates on an annual basis. Effective January 1, 2008, an additional Medicaid Trend Adjustment shall be applied to achieve a recurring annual reduction of $75,182,236. (emphasis indicating new language) History of the Rule In Florida, the Legislative appropriations process regarding Medicaid recipients includes an estimating conference that estimates the projected caseload, or actual occupancy, and expenditures for nursing homes. The Agency’s Division of Medicaid provides estimates of caseload and expenditures to the Social Services Estimating Conference. The Social Services Estimating Conference (Estimating Conference) meets several times a year. At these meetings, the Medicaid caseloads and Medicaid expenditures are estimated, which forms the underlying basis on which most of the Medicaid budget is crafted. Representatives of both Petitioners and the Agency had input in the information provided to the Estimating Conference held prior to the 2007 Special Session. The term “Medicaid Trend Adjustment,” referenced in appropriations act language quoted above, was first used in 2005. The term was used in the Long-Term Care Reimbursement Plan to describe the means to implement reductions to nursing home rates based upon a weighted average of Medicaid patient days. The Medicaid Trend Adjustment reduced the rates in the amount necessary to meet the reduction in appropriations as a percentage reduction from each facility’s rate. The Medicaid Trend Adjustment is applied proportionally to individual facilities’ reimbursement rates until the aggregate of the targeted trend adjustment is achieved. On October 30, 2007, shortly after the 2007 Special Session, representatives of both Petitioners and the Agency met to discuss the methodology for implementing the reduction in appropriation. At that meeting, only one methodology was discussed as to how to implement the reduced appropriation. That is, consistent with Petitioners’ position, that of employing a cut from the appropriated amount. Representatives of the Petitioners believed that this was how the appropriations act language would be implemented, and that the Medicaid Trend Adjustment would be modified only as necessary to stay within the reduced appropriation. Sometime after that meeting, AHCA proceeded with their normal rate setting process for January 1, 2008 rates. AHCA staff consulted with legislative staff as to rates and the methodology they intended to use to meet the reduced appropriation. Phil Williams is the acting Assistant Deputy Secretary for Medicaid Finance with AHCA. Mr. Williams participated in the October 2007 meeting and was involved in the process described above regarding Medicaid reimbursement to providers. Mr. Williams received a phone call on December 20, 2007, from legislative staff during which he received direction to make the reductions from the actual rates as of January 1, 2008. Petitioners’ representatives, who had participated in the October 2007 meeting, and who generally participated in the Legislative process regarding Medicaid reimbursements, then received phone calls from AHCA in which they were informed that the methodology they discussed at the October 2007 meeting would not be utilized. Instead, as of January 1, 2008, the Agency would reduce actual rates for the period January 1 through June 30, 2008. Imposing the reductions from the projected rates has a larger negative impact on the nursing home industry than a reduction from the appropriated amount.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of this Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 3. Each party shall bear its own costs and attorney’s fees. Any requests for administrative hearings are hereby dismissed, and the above-styled case is hereby closed. 1 Filed August 2, 2013 9:55 AM Division of Administrative Hearings , 2013. ORDERED at Tallahassee, Florida, on this nat! ay of je a LL Me you abeth Dudek, Secretary Agency for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct copy of this Final Order was served on the below-named persons by the method designated on this 3° day of , 2013. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Facilities Intake Unit Agency for Health Care Administration (Electronic Mail) Thomas Jones, Unit Manager Licensure Unit Agency for Health Care Administration (Electronic Mail) Christopher A. Parrella, J.D., CHC, CPC, CPCO The Health Law Offices of Anthony C. Vitale, P.A. 2333 Brickell Avenue, Suite A-1 Miami, Florida 33129 (U.S. Mail) Warren J. Bird Office of the General Counsel Agency for Health Care Administration (Electronic Mail) Finance & Accounting Revenue Management Unit Agency for Health Care Administration (Electronic Mail)
The Issue Petitioners have brought this action pursuant to Section 120.56, Florida Statutes, challenging the validity of a rule of Respondent, Department of Professional Regulation, Board of Nursing (also referred to herein as the "Board"). Petitioners challenge a recent ammendment to Rule 21O-15.01, Florida Administrative Code, which increased the license renewal fees for nurses regulated by the Board. Petitioners contend that the rule is an invalid exercise of delegated legislative authority and that Respondent failed to comply with the notice provisions of Section 120.54(1), Florida Statutes, prior to the adoption of the amendments to the rule.
Findings Of Fact Facts by Stipulation The Petitioners are nurses regulated and licensed by the Board of Nursing and are subject to the increased license fees as required by the amendment to the rule now challenged. The Respondent, Department of Professional Regulation, Board of Nursing, has adopted an amendment to Rule 21O-15.01, Florida Administrative Code, which amendment increases the fee for the renewal of licenses for nurses from twelve dollars ($12.00) to twenty-two dollars ($22.00) biennially. The amendment to Rule 210-15.01, Florida Administrative Code, substantially affects the Petitioners in that each Petitioner is subject to the provisions of said rule and each Petitioner is required to pay the increased license renewal fee in order that each may continue to be licensed and may continue employment as nurses. Petitioners, Gail Hallas, Harriett Scott and Eve Tamble, were aware of the proposed rule change and attended and/or participated in the public hearing held on January 2, 1981, regarding the proposed fee increase. The other Petitioners were not aware of the proposed rule change and did not attend the hearing on January 2, 1981, and remained unaware of the proposed rule change increasing the fees for renewal of licenses until after the rule had become effective. Evidential Stipulations The following Exhibits were introduced into evidence pursuant to the Stipulation of the parties: EXHIBIT 1: The entire record submitted to the First District Court of Appeal, Case No. AC-314, involving the same parties hereto and substantially the same issues as are presented herein. These materials include the transcripts of a public hearing held on January 2, 1981, a meeting of the Board held on February 5, 1981, as well as the Notice of Hearing and Meeting published in the Florida Administrative Weekly (F.A.W.), the Department of Professional Regulation (herein also referred to as the "Department") Newsletter, and information used by the Board in determining the fee increase. EXHIBIT 2: A document titled "Department of Professional Regulation, Board of Nursing, General Information, January 2, 1981," comprised of fiscal information used by the Respondent in determining the license renewal fee increase. EXHIBIT 3: A document titled "Pro-Ration Bases for 1979-80, Indirect Cost-Annual Report," indicating how expenditures of the Department were prorated to the individual professional boards within the Department. Witnesses Witnesses The following persons testified at the hearing held in this cause: Helen P. Keefe, Executive Director of the Board of Nursing; Charles Barner, Assistant Secretary of the Department of professional Regulation; and Louis H. Ritter, Past Secretary of the Department of Professional Regulation. Further Material Facts This cause arose from a recent amendment to Rule 21O-15.01, Florida Administrative Code, by the Board of Nursing. As stated before, the amendment increased the biennial license renewal fee of nurses from twelve dollars ($12.00) to twenty-two dollars ($22.00). The twelve dollar ($12.00) biennial fee had been in effect since 1976. The fee arrangement has its basis per Section 464.013, Florida Statutes. This provision requires that nurses renew their licenses every two years, by application. It is the responsibility of the Department to notify each licensee at least sixty (60) days prior to the end of the biennium so that they may apply for renewal. It was shown in the hearing, that the most recent renewal date established by the Department was April 1, 1981, and that renewal notices were to be mailed out at the end of January, 1981. (In this instance, the Board was unable to reach a final decision by the prescribed date, and the Department, by emergency rule amendment, extended the time by one month in which fees could be paid.) When the fee was increased, it affected all active and inactive practitioners. To effectuate the fee increase, exhibits introduced into evidence show that the Board gave notice in the December 12, 1980, volume of the Florida Administrative Weekly of its intent to amend the challenged rule. The notice provided that a hearing would be held on January 2, 1981, upon request. That notice indicated the intention to raise fees set by the Board to meet revenue demands, including renewal of license fees. See p. 50, Petitioner's Exhibit No. 1. A similar notice was also published on the last page of the Department's December, 1900, issue of its Newsletter. The Newsletter was mailed on or about December 15, 1980, to approximately 1,450 persons. The persons receiving the Newsletter were generally hospital administrators, health care administrators and other employers of nurses. The employers are requested to post the Newsletter, for the benefit of their employee nurses, but Ms. Keefe testified that not all do so and that the Board had no way of knowing how many nurses actually received notice of the Newsletter. The Florida Nurses Association was also notified of the proposed rule amendments. The F.N.A. is comprised of approximately 5,000 registered nurses only and does not include licensed practical nurses. No specific attempt was made to notify the class of licensed practical nurses or registered nurses not members of the F.N.A. The fact that a nursing license fee increase might become necessary had its roots in a document prepared by the Department's staff entitled "State of Florida, Department of Professional Regulation, Annual Report, Board of Nursing," dated September 15, 1980. This document alone was inconclusive, as it only summarized the Board's fiscal picture for the fiscal year 1979-80, and concluded that the Board would have $400,000.00 of revenues available to begin the 1980-81 fiscal year. However, sometime in October, 1980, when the Department finalized its budget request to be submitted to the Governor, it became clear that the Board's predicted revenues combined with its carry-over revenues would be insufficient to meet the expenditures predicted and requested in the Department's budget request. Helen P. Keefe, the Board's Executive Director, first became aware of the Department's financial forecasts on November 9, 1980, when she received a copy of the Department's "Financial Package" with a cover memorandum from the Department's Secretary, Nancy Kelley Wittenberg, dated November 7, 1980. That package contained the above-referenced Annual Report of the Board of Nursing, the Department's 1981-83 Legislative Budget Request, and the Projected Cash Balances for fiscal years 1980-81, 1981-82 and 1982-83. This last document indicated that the Board would be into deficit spending by the end of the 1981- 82 fiscal year. To enable the Board to formally discuss its financial outlook and the possibility of a fee increase, notice was given in the November 21, 1990, edition of the Florida Administrative Weekly that a rules workshop was being scheduled for December 3, 1980, at the Board's headquarters. The purpose of the workshop was stated as being to discuss the possible revision of Rule Chapter 21O-15, Florida Administrative Code. While the notice did reference the specific rule chapter to be discussed, the title and subject matter of the rule chapter were not expressly mentioned, although the notice did state that a copy of the agenda was available upon request. At the December 3, 1980, workshop, the Board received and discussed the above-referenced Financial Package of the Department. This was followed by the December 12, 1980, notice of amendment in the Florida Administrative Weekly. Following the notice published in the December Florida Administrative Weekly, a hearing was requested by several nurses and held on January 2, 1981, in Tampa, Florida. Approximately 40 to 50 persons attended, as stated before, including Petitioners Hallas, Scott and Tamble. At the time of the hearing, the Board was proposing an increase in the renewal fees from the then current fee of twelve dollars ($12.00) to thirty dollars ($30.00) biennially. Following considerable discussion, the Board decided not to take any action at that time, deferring further consideration until its regularly scheduled meetings to be held February 4-6, 1981, in Tallahassee. At the conclusion of the January 2, 1981, hearing, the Board made a "general announcement" to those present that the fee increases would be considered again in the February, 1981, meeting. At the January, 1981, session, in addition to listening to the testimony and comments from the audience, the Board was presented testimony from Mr. Charles Barner, the Department's financial analyst. His testimony before the Board, as well as his testimony in this administrative hearing, indicates that the data on which the Department was basing its financial predictions was dynamic in that it was constantly changing and being upgraded. There were apparently several reasons for this state of affairs. First, the relationship between the Department and the regulatory boards under its control was dramatically altered as a result of reorganization in 1979. The alteration meant that many of the services and functions carried out by the individual boards prior to reorganization are now performed by the Department. Second, as was expected with reorganization of the regulatory agencies, disciplinary complaints and proceedings have increased. Testimony was given at the hearing that disciplinary hearings involving nurses have increased at least 100 percent since reorganization and that those proceedings currently comprise 50 to 67 percent of each Board meeting. Third, the number of foreign nurses paying to take the examination in Florida was and is expected to decrease as a result of a change in Federal immigration policy and the Board's income from this source will be reduced by an unpredictable amount. Fourth, and most significantly, it was impossible to predict the number of licensed nurses who would renew their licenses. In this respect, renewal fees comprise the largest source of Board income. Prior to 1981 renewal, testimony indicated that there were approximately 110,000 nurses licensed in Florida. During the preceding biennium, however, a requirement that nurses participate in continuing education was imposed as a prerequisite to renewal, and it was felt that a substantial portion of non-working licensed nurses would not meet this requirement and consequently that number of renewals would drop. The Department was unable to accurately predict the number of renewals and was in a position of having to estimate that number with no past performance standards to go on. Information available to the Department on January 2, 1981, caused it to predict 81,000 renewals. As time went by and more current data became available, the Department was able to revise its estimates upwards. The data presented at the January 2, 1981, rule hearing apparently suggested that a $30.00 biennial renewal fee would be necessary to meet the Board's expenditure predictions during the succeeding biennium. However, because of the concerns expressed by the numerous nurses and nurse representatives who spoke at the rule enactment hearing, as well as the "softness" of the Department's financial predictions, the Board voted to defer any action on the proposed amendment until its next meeting which was scheduled for February 5 and 6, 1981, in Tallahassee. The Board also recommended at that time that the Department extend the license renewal period by 30 days. Between the January 2, 1981, rule hearing and the February 4, 1981, Board meeting, the Department was constantly involved in revising its financial predictions based on new information that became available. The Board subsequently noticed the February, 1981, meeting in the January 23, 1981, issue of the Florida Administrative Week1y. The Board did not notice the meeting in Section II, Florida Administrative Weekly, under Proposed Rules. Additionally, the notice of the meeting contained no reference to the proposed rule amendments or that further consideration would be given to the fee increases. It did state that an agenda would be made available upon request. The agenda for the February, 1981, meeting included reference to adoption of the subject rule amendment by rule number, but made no specific reference to the substance of the rules or fee increases. No other notice of the proposed fee increases was given other than the "general announcement" given at the January 2, 1981, hearing. The Board took up the proposed amendment to Rule 21O-15.01, Florida Administrative Code, on February 5, 1981. The updated financial predictions were received from the Department which included a series of options based on raising license renewal fees to $14.00, $18.00, $20.00, $22.00 and $24.00. These predictions wore based on an estimate that 91,000 nurses would renew their licenses. Mr. Barner explained the figures and indicated his belief that the $22.00 renewal fee was the least that would not result in a deficit at proposed expenditure levels. The Board then voted to adopt the proposed rule amendment insofar as it called for a $22.00 renewal fee. The rule amendment was filed with the Department of State on February 13, 1981. Following rule adoption, approximately 96,000 nurses had renewed their licenses by June 30, 1981. In addition to the information already discussed, historical data presented indicates that the number of renewals for nurses has grown each year from 61,980 in 1973, to 91,373 in 1979. Data provided by the Department to the Board of Nursing at its January 2, 1981, meeting (Petitioner's Exhibit No. 2), also established that during the period 1973 - 1979, the average annual expenditure increase of the Board of Nursing was $143,802.00 or a 20 percent average annual increase in expenditures through fiscal year 1978-79. For fiscal year 1979-80, the Board of Nursing spent $1,945,437.00, after reorganization wherein the Department acquired central control over the Board's trust funds and expenditures. Expenditures charged to the Board of Nursing in the first year in which those expenditures were controlled by the Department, showed an annual increase in excess of 50 percent. This increase in expenditures charged to the Board of Nursing is a result of formulas developed by the Department to charge expenditures against individual revenue accounts of its several constituent boards. In adopting the subject rule, the Board used information in which the Department categorized charges to the Board of Nursing in two ways: direct and indirect. Direct charges are any charges which can be identified to services performed directly for the Board of Nursing or expenses incurred by the Board of Nursing. Direct costs include salaries of 22 employees located in the Board office in Jacksonville, Board members' compensation, purchase of national examinations, travel directly associated with the Board's activities, rent at the Jacksonville office, postage, telecommunications, etc. Indirect costs include all those overhead expenses which cannot be identified to any individual board which are expended by the Department generally. Indirect costs are allocated based upon pro rata formulas for various work centers of functions within the Department. Seven different formulas are used for allocating various categories of indirect costs. An entire breakdown of how the formulas are applied to each board is provided in Petitioner's Exhibit No. 3.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $9,000.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed December 26, 2012 3:52 PM Division of Administrative Hearings 3. The six-month survey cycle is imposed and conditional licensure status is imposed beginning on 9/19/2011 and ending on 10/06/2011. ORDERED at Tallahassee, Florida, on this al day of Decente — , 2012.
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 CERTIFY that a true and correct copy of this Final Order was served on the below-named persons by the method designated on this sh ay of , 2012. Richard Shoop, Agency k Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit | (Electronic Mail) (Electronic Mail) Tria Lawton-Russell Jonathan S. Grout, Esq. Office of the General Counsel Attorney for Respondent Agency for Health Care Administration Post Office Box 2011 (Electronic Mail) Winter Park, FL 32790 (U.S. Mail) Cathy M. Sellers Administrative Law Judge Division of Administrative Hearings | Electronic Mail)
The Issue The issues in this case are the amount of attorney’s fees and costs to be awarded to Petitioners pursuant to Section 120.595, Florida Statutes (2007);1 whether Petitioners are entitled to fees and costs pursuant to Subsections 57.105(5), 120.569(2)(e), and 120.595(4), Florida Statutes; and, if so, what amount should be awarded.
Findings Of Fact Each of the 14 Petitioners filed separate rule challenges, challenging the validity of Florida Administrative Code Rule 64B16-26.2031 and challenging eight statements of policy of the Board of Pharmacy, which statements had not been adopted as rules. Prior to the filing of his or her rule challenge, each Petitioner had graduated from a pharmacy school located outside the United States and had taken and passed the Foreign Pharmacy Graduate Equivalency Examination, the Test of Spoken English, and the Test of English as a Foreign Language. Petitioners had been issued Intern Registrations by the Board of Pharmacy. All but two of the Petitioners had submitted an application to be admitted to the professional licensure examination. Those applications had been denied. All Petitioners, including the two Petitioners who had not submitted an application, had applied to the Board of Pharmacy for a variance or waiver to allow them to sit for the professional licensure examination. The Board of Pharmacy denied each Petitioner’s application for a variance or waiver. Each Petitioner had been represented by The Health Law Firm in their applications for a variance or waiver and wanted The Health Law Firm to continue to represent them in the rule challenge. When asked why the Petitioners had contacted The Health Law Firm to represent them, an attorney for The Health Law Firm stated: I think they have a network where word just gets around. And they-–I believe they even had some sort of list serve or Web site where they had all noted that they were being treated unfairly, and so they knew each other. And maybe our name got out on that or something. But they-–they all seemed to know each other-–seemed to know each other. Additionally, The Health Law Firm had sent out letters soliciting the foreign pharmacy graduates to join the rule challenge. An attorney for The Health Law Firm was not sure whether the letter had been posted on the web site for the foreign pharmacy graduates. In several of the invoices submitted by The Health Law Firm, there was a charge of $20.00 for a “[t]elephone conference with client’s colleagues who are in the same situation and interested in filing petitions for waivers and joining the rule challenge.”2 Thus, the circumstances surrounding the representation of Petitioners by The Health Law Firm do not demonstrate that it was a coincidence that Petitioners just happened to pick The Health Law Firm to represent them in the rule challenges. The Health Law Firm decided to file 14 separate petitions instead of one petition with 14 petitioners. The reason for the filing of the separate petitions was to increase the amount of attorney’s fees which could be awarded. Given the inexperience of attorneys at The Health Law Firm with rule challenges and the difficulty in understanding the speech of Petitioners, who received their pharmacy training in countries other than the United States, The Health Law Firm felt that it was not economically feasible to pursue the rule challenge for $15,000.00. Petitioners had a common goal, i.e. to be allowed to sit for the professional licensure examination. The wording of each of the petitions was essentially the same except for the names of the individual Petitioners. Because the issues were the same for all the rule challenges, the rule challenges were consolidated for final hearing. No final hearing was held in the consolidated cases. The parties agreed that, based on the parties’ Joint Pre-hearing Stipulation, there were no disputed issues of material fact and agreed to file proposed final orders addressing each party’s position regarding the application of the law to the stipulated facts. The Board of Pharmacy conceded that Florida Administrative Code Rule 64B16-26.2031 was an invalid exercise of delegated legislative authority, and Petitioners were determined to prevail on the issue of the invalidity of the existing rule. On the challenge to the Board of Pharmacy’s policy statements, four statements were determined to meet the definition of a rule. The Board of Pharmacy conceded in the parties’ pre-hearing stipulation that the instructions in the Foreign Pharmacy Graduate Application for Licensure by Examination, directing applicants not to apply prior to obtaining all the required internship hours, constituted a non-rule policy. On August 1, 2008, in response to its concession that some of the statements or policies at issue were invalid non-rule policies, the Board of Pharmacy had published, in the Florida Administrative Law Weekly, a Notice of Rule Development for Florida Administrative Code Rule 64B16-26.2031. On August 21, 2008, the Board of Pharmacy approved changes to Florida Administrative Code Rule 64B16- 26.2031, eliminating the Foreign Pharmacy Graduate Examination Committee (FPGEC) requirement, incorporating by reference the Foreign Graduate Examination Application, and stating the time frames for the application of Florida Administrative Code Rule 64B16-26.2031. Pursuant to Subsection 120.56(4)(e), Florida Statutes, the portion of the petitions dealing with the statements on which the Board of Pharmacy did not prevail was abated pending the rulemaking process. Petitioners did not prevail on four of the policy statements they challenged. These were the policy statements which the Board of Pharmacy contested. Based on the invoices submitted, the parties attempted to settle the case. Essentially, the Board of Pharmacy had started rule development which eliminated the requirement in the existing rule which caused it to be invalid and which dealt with the unpromulgated rule issues that the Board of Pharmacy had conceded in the Joint Pre-hearing Stipulation. Petitioners wanted to be able to sit for the National Association of Pharmacy Licensure Examination (NAPLEX) and the Multistate Pharmacy Jurisprudence Examination (MPJE). All Petitioners who had a Foreign Pharmacy Graduate Application for Licensure by Examination pending on August 21, 2008, were approved by the Board of Pharmacy to sit for the NAPLEX and the Florida version of the MPJE. Thus, by August 21, 2008, those Petitioners had reached their goal. The impediment to settling the cases was the amount of attorney’s fees that should be awarded to Petitioners. There was no undue delay by the Board of Pharmacy or anything which could be attributed to the Board of Pharmacy as needlessly increasing the cost of litigation. The Board of Pharmacy correctly contended that the amount of fees requested by Petitioners was unreasonable. The Partial Final Order entered in the underlying rule challenges held that Petitioners are entitled to an award of attorney’s fees and costs pursuant to Subsection 120.595(3), Florida Statutes. The Board of Pharmacy was not substantially justified in promulgating the challenged rule in the underlying case and did not demonstrate that special circumstances existed to warrant the promulgation of the challenged rule. The Board of Pharmacy did not demonstrate that the statements which constituted unpromulgated rules are required by the Federal Government to implement or retain a delegated or approved program or to meet a condition to receipt of federal funds. Each Petitioner entered into a contingency fee contract3 with The Health Law Firm to represent him or her in a rule challenge. The parties have agreed that the hourly rate of $350.00 per hour for the services of George F. Indest, III, Esquire, is reasonable and fair under the circumstances. The parties have agreed that some of the hourly rates being claimed for the other attorneys and employees of The Health Law Firm are reasonable and fair under the circumstances. Those fees are $200.00 and $150.00 per hour for the associate attorneys, $80.00 per hour for the paralegals, and $70.00 per hour for the legal assistants. There were a few entries in the invoices made by senior attorneys for whom the rate charged is $300.00 per hour. Based on the rates charged for the senior partner and the associate attorneys, an hourly rate of $300.00 for a senior attorney is reasonable. The names of the attorneys and staff and the respective hourly rate amount for each are listed below. In discussing the reasonableness of the fees claimed in the various invoices, the attorneys and staff will be referred to by their initials as listed in the invoices. Initials Name Hourly Rate GFI George F. Indest, III, Senior Partner $350.00 MLS Michael L. Smith, Senior Attorney $300.00 JK Joanne Kenna, Senior Attorney $300.00 TJJ Teresa J. James, Attorney $200.00 MRG Matthew R. Gross, Attorney $150.00 JP Justin Patrou, Law Clerk $100.00 GJ Gail Joshua, Senior Paralegal $80.00 PD Pamela Dumas, Litigation Clerk $80.00 SF Sandra Faiella, Paralegal $80.00 RS Rebecca Simmons, Paralegal $80.00 AE Alexa Eastwood, Legal Assistant $70.00 SE Shelly Estes, Legal Assistant $70.00 The amount of fees claimed by each Petitioner for representation by The Health Law Firm for the rule challenge is listed below. These amounts are based on the individual invoices and the first consolidated invoice:4 Name Amount Vipul Patel $15,212.36 Miriam Hernandez $15,683.36 Mirley Aleman-Alejo $11,469.36 Valliammai Natarajan $5,074.36 John H. Neamatalla $11,215.36 Samad Mridha $13,650.36 Se Young Yoon $12,292.36 Saurin Modi $10,093.36 Deepakkumar Shah, M.Ph. $11,764.36 Mijeong Chang $12,528.36 Nabil Khalil $10,272.36 Hadya Alameddine $5,313.36 Balaji Lakshminarayanan $4,585.36 Anand Narayanan $4,218.36 Total $143,372.04 Sandra Ambrose testified as an expert witness on behalf of Petitioners. Her opinion is that the amounts claimed are based on a reasonable number of hours expended in the litigation of the rule challenge. However, Ms. Ambrose has never represented a client in a rule challenge. It was Ms. Ambrose’s opinion that the difficulty in the cases was a result of the number of Petitioners not the issues to be litigated. Having reviewed all the invoices submitted in these cases, the undersigned cannot credit Ms. Ambrose’s testimony that the fees are reasonable. The Board of Pharmacy argues that the amount of fees and costs should be limited to the amount expended in the petition brought by the first Petitioner, Vipul Patel. The expert who testified for the Board of Pharmacy did not give a definite amount that he considered to be a reasonable fee in these cases. Prior to the final consolidation of all 14 rule challenges, The Health Law Firm invoiced for its services and costs by individual Petitioner. After all 14 rule challenges were consolidated, The Health Law Firm invoiced for its time and costs via a consolidated invoice. The undersigned has painstakingly reviewed all the invoices that were submitted to support Petitioners’ claims for fees and costs in the rule challenges and finds the fees requested are not reasonable. On May 15, 2008, the invoices for Case Nos. 08-2733RX contained the following entry for MRG. “Review/analyze final order. Strategize regarding final order.” The final order appears to be related to a petition5 for a waiver or variance before the Board of Pharmacy, and the entry is deleted. This conclusion is supported by the entry in the invoice dated May 29, 2008, relating to a telephone conference with the client relating to a re-petition for waiver. In Case No. 08-2730RX, there is an entry on May 27, 2008, for .10 hours for MRG, but no service is listed. That entry is deleted. On June 6, 2008, MRG entered .50 hours each in Case Nos. 08-2728RX, 08-2729RX, 08-2732RX, 08-2733RX, 08-2734RX, 08-2821RX, 08-2823RX, 08-2824RX, and 08-3298RX. The entry stated: “Continue preparing rule challenge and waiver.” The Health Law Firm represented the Petitioners in four of these cases before the Board of Pharmacy on June 10, 2008, on their petitions for a wavier or variance. The invoice does not delineate the amount of time that was spent on the rule challenge and the amount of time that was spent on the waiver cases. Therefore, the time is divided equally and .25 hours in each case is charged toward the rule challenge. 23. On June 9, 2008, in Case Nos. 08-2733RX, 08-2730RX, 08-2731RX, 08-2734RX, 08-2729RX, and 08-2732RX, the senior partner of The Health Law Firm entered .30 hours for each case, which stated: “Prepare letter to Division of Administrative Hearings forwarding Petition for Rule Challenge to be filed.” The letter which accompanied the petitions in these cases stated: Dear Clerk: Attached for filing, please find a separate Petition to Determine the Invalidity of an Existing Agency Rule and the Invalidity of Agency Policy and Statements defined as Rules, for each of the individuals listed below: Miriam L. Hernandez Mirley Aleman-Alejo Se Young Yoon John H. Neamatalla Valliammai Natarajan Md. A. Samad Mridha Thank you for your assistance in this matter. For this letter, Petitioners are claiming 1.8 hours or $630.00. This is not reasonable. On the same date, GFI prepared a similar transmittal letter in Case No. 08-2728RX and listed .3 hours, which is a reasonable amount for the preparation of such a letter. Thus, the preparation of the transmittal letter on June 9th for Case Nos. 08-2733RX, 08-2730RX, 08-2731RX, 08-2734RX, 08-2729RX, and 08-2732RX is reduced to .3 hours, which is prorated to .05 hours for those cases. The senior partner in The Health Law Firm claims 23.6 hours during June 3 through 5, 2008, for the following service which was entered on the invoices for Case Nos. 08-2730RX, 08-2729RX, 08-2731RX, 08-2823RX, 08-3298RX, 08-2821RX, 08-2728RX, 08-2734RX, 08-2733RX, and 08-2824RX. Conduct legal research, review statutes, cases (approximately 28 cases reviewed and analyzed) and two (2) different Florida Administrative Law legal treatises regarding rule challenges and challenging agency statements not adopted as rules, in order to properly prepare Petition for Formal Rule Challenge in case. Research legal issues including administrative agency rules exceeding authority granted in statutes, retroactive applications of agency rules, adding requirements to licensure requirements through administrative rules when those requirements are not contained in the statute. Review Rules of Procedure and Chapter 120 to determine contents of Rule Challenge Petition. Begin reviewing and revising draft for Rule Challenge in case. (Note: Only pro-rata portion of this time charged to each case.) The total amount of fees claimed for this research is $8,260.00. GFI testified that he had never done a rule challenge prior to filing the petitions in the instant cases. His fees for research due to his lack of knowledge of the basics of a rule challenge should not be assessed against the Board of Pharmacy. A reasonable amount of time for his research is four hours. Thus, the amount for this legal research prorated among the ten cases for which it was listed is .4 hours. On July 19, 2008, the senior partner of The Health Law Firm entered .60 hours in ten of the rule challenges for reviewing the Transcripts of the Board of Pharmacy meetings for February 8 and April 5, 2008, and preparing a notice of filing the Transcripts with the Division of Administrative Hearings. Six hours to review the Transcripts and prepare a notice of filing is not reasonable. Three hours is determined to be a reasonable amount of time for this task, and that amount is prorated among the ten cases in which the charge was made. On June 10, 2008, members of The Health Law Firm attended a Board of Pharmacy meeting at which they represented foreign pharmacy graduates who had petitioned the Board of Pharmacy for a waiver or variance. In Case Nos. 08-2821RX, 08-3298RX, and 08-2733RX, the senior partner listed .90 hours for each case for preparation for the June 10th Board of Pharmacy meeting. The preparation related to the petitions for variances or waivers and should not be assessed for the instant cases. For June 10, 2008, JP listed .70 hours each in Case Nos. 08-2823RX, 08-2732RX, 08-2821RX, and 08-2733RX for attendance at the Board of Pharmacy meeting. For June 10, 2008, GFI entered 1.4 hours for attendance at the Board of Pharmacy meeting. The entries for attending the Board of Pharmacy meeting related to the petitions for waivers and should not be assessed in the instant cases. For June 19, 2008, the senior partner made the following entry in the invoices for Case Nos. 08-2728RX, 08-2729RX, 08-2732RX, 08-2733RX, 08-2734RX, 08-2821RX, 08-2823RX, and 08-2824RX: Travel to Boca Raton to meet with other health care lawyers and discuss issues in common on these cases and others. Discuss legal strategies that worked in the past and legal strategies to be avoided. Return from Boca Raton. Each entry was for one hour, for a total of eight hours claimed for a trip to Boca Raton, which equates to $2,880.00. Based on the entry, it seems that the trip included discussions of other cases that The Health Law Firm was handling or that other attorneys were handling. Additionally, there was no rationale for having to travel to Boca Raton to discuss the issues, and fees for such travel should not be awarded. A reasonable amount of time for discussion of the case with other attorneys by telephone would be .80 hours. The prorated amount of time for each case listed is .10 hours. On May 27, 2008, SF made a .30-hour entry in Case No. 08-2824RX for reviewing the agenda of the June 10th Board of Pharmacy meeting as it related to the client in Case No. 08-2824RX. The entry related to the client’s petition for a waiver, which was heard at the June 10th meeting and should be deleted. On May 30, 2008, in Case No. 08-2824RX, SF made a .40-hour entry for drafting a letter to client with retainer agreement. The entry is clerical and should be deleted. On June 18, 2008, an entry was made in the invoice in Case No. 08-2731RX, which stated: “Telephone call from husband of our client indicating that they want us to close this matter and that they do not wish to pursue it any further; follow-up memorandum to Mr. Indest regarding this.” Charges continued to be made to the client through July 16, 2008. Based on the entry to the invoice on June 18, 2008, no further charges should have been made to the client except for the filing of a voluntary dismissal of the rule challenge for the client. However, no voluntary dismissal was filed. Based on the absence of any further charges to the client after July 18, 2008, it is concluded that the client did wish not to proceed with her rule challenge. Any charges by The Health Law Firm after June 18, 2008, in Case No. 08-2731RX will not be assessed against the Board of Pharmacy as it relates to the rule challenge. On June 19, 2008, TJJ made the following .10-hour entry in ten of the cases: “Review June 10, 2008, Board of Pharmacy Agenda. Telephone conference with Court Reporter, Ms. Green, ordering transcript of the June 10, 2008, meeting.” An hour for reviewing an agenda and ordering a transcript is not reasonable. A reasonable amount of time is .40 hours, and such time is prorated to the ten cases in which it is charged. 33. On June 20, 2008, in Case Nos. 08-2823RX and 08-2824RX, TJJ made a .80-hour entry which stated: “Prepare draft motion for consolidation.” No motion was ever filed and would not have been necessary since the parties had agreed at the pre-hearing conference that the rule challenges would be consolidated. The time for this service should be deleted. 34. On July 10, 2008, TJJ made the following .10-hour entry in several of the cases: “Review prehearing instruction orders and amended orders to determine respondent’s deadline to serve discovery responses.” The entry is duplicative of services provided by MRG on July 8, 2008, and should be deleted. 35. On July 15, 2008, in Case Nos. 08-2729RX, 08-2728RX, 08-2730RX, 08-2732RX, 08-2733RX, 08-2734RX, 08-2821RX, 08-2823RX, 08-2824RX, and 08-3298RX, TJJ had .40 hours for a total of 4.00 hours for the following entry: Prepare Petitioners’ Motion to Compel Discovery and assemble and copy documents to be attached to Motion. Prepare facsimile coversheets and transmit the Motion to the attorney for the Board of Pharmacy, Ms. Loucks, and to the clerk for the Division of Administrative Hearings. The copying, preparing facsimile coversheets, and transmitting the motion are clerical tasks. The entries are reduced to .20 hours due to the clerical nature of the tasks, which leaves a total of two hours for preparing a simple motion to compel. The time for the preparation of the motion to compel is not reasonable and is reduced to .10-hour for each entry. On July 22, 2008, the last Order consolidating all the cases was filed. The Order consisted of four paragraphs. On July 29, 2008, TJJ entered .10 hours in Case Nos. 08-2733RX, 08- 2730RX, 08-2734RX, 08-2728RX, 08-2729RX, 08-2732RX, 08-2824RX, 08-3510RX, 08-3488RX, 08-3347RX, 08-2823RX, 08-3298RX, and 08- 2821RX, and each entry stated: “Review order of consolidation filed on July 22, 2008, for common information needed for all cases.” Thus, Petitioners are claiming a total of 1.3 hours or $260.00 to review a four-paragraph Order of Consolidation. This claim is not reasonable. A reasonable amount of time to review the Order was .10 hours, and the time shall be prorated among the cases for which it was claimed at .08 hours each. On July 24, 2008, TJJ made an entry of .10 hours in ten of the cases which stated: Telephone conference with the clerk of the District Court of Appeal, First District to find out the start time of oral arguments on Custom Mobility (rule challenge case). Request information from clerk regarding how to listen to oral arguments online. Observing this oral argument will allow us to better prepare our case for possible appeal. First, a one-hour telephone conversation with the Clerk of District Court of Appeal to ascertain the time for an oral argument and to learn how to listen to oral arguments online is not reasonable. Second, it is not reasonable to charge the Board of Pharmacy with a call to the District Court of Appeal in the instant cases, even if the amount of time for the call had been reasonable. The one-hour charge for $200.00 for a telephone call is deleted. On July 30, 2008, TJJ made an entry of .10 hours in 13 of the rule challenges. The entry stated: “Listen to oral arguments presented before District Court of Appeals, First District, in Custom Mobility case (rule challenge case).” The oral argument was not related to the instant rule challenges and should not be charged to the Board of Pharmacy. The 1.3 hours or $260.00 claim for listening to an oral argument is deleted. On August 4, 2008, TJJ made the following .10-hour entry in 13 of the cases: “Review Joint Motion for Abeyance and Order Canceling Hearing and Placing Cases in Abeyance. Calendar deadlines regarding same.” The time of 1.3 hours for reviewing the simple motion and Order is not reasonable. Calendaring is a clerical task. The time for this service is reduced to .01 hours for each entry. On August 5, 2008, TJJ made the following .10-hour entry in 13 of the cases: “Review Respondent’s Objections and Responses to Petitioners’ Second Set of Interrogatories and Respondent’s Objections to Petitioners’ Second Set of Requests for Admissions.” The objections were that the interrogatories and requests for admissions exceeded 30. The time of 1.3 hours for reviewing the pleadings is not reasonable. The time for this service is reduced to .04 for each entry. Petitioners had scheduled the depositions of Rebecca Poston and Daisy King for July 18, 2008. On July 17, 2008, Petitioners filed notices canceling the depositions. On July 17, 2008, PD entered .10 hours in ten of the rule challenges for the following entry: Telephone conference with Accurate Stenotype Reporters regarding cancellation of depositions of Daisy King and Rebecca Poston on July 18, 2008 and delay transcription of depositions of Erika Lilja and Elizabeth Ranne due to potential settlement. It is not reasonable to charge an hour to cancel depositions with the court reporter. A reasonable amount of time would be .10 hours, which is prorated to the ten cases to which it is charged. PD prepared the notice of the canceling of the deposition of Ms. Poston and the notice of the canceling of the deposition of Ms. King. Entries were made in ten of the cases for time for preparing the notices. The total time for preparing the two notices by PD was 1.45 hours. The time is not reasonable. A reasonable time to prepare two notices of canceling depositions would be .40 hours, which is prorated among the ten cases in which it was charged. One of the issues on which Petitioners did not prevail in the rule challenges was the issue of retroactive application of the rule. There are entries totaling 3.4 hours for JP for preparation of a memorandum dealing with the retroactive application of a rule issue. GFI entered .30 hours for the same issue. The time relating to the retroactive application issue is deleted. On April 19, 2008, MRG entered .20 hours each in several cases, which related to the rule challenge and retroactive application issue. That time is reduced by half. On May 6, 2008, MRG made .60-hour entries in Case Nos. 08-2728RX, 08-2729RX, 08-2730RX, 08-2732RX, 08-2733RX, 08-2734RX, 08-2821RX, 08-2823RX, 08-2824RX, and 08-3298RX, which showed the preparation of three sections of the petition. One of the sections dealt with the retroactive application issue, and the entries are reduced by .20 hours for that issue. The invoices demonstrated that a considerable amount of time was charged for legal assistants and paralegals. Much of this time was for clerical tasks. SE is identified in Petitioners’ exhibits as a legal assistant. The majority of the entries by SE dealt with the photocopying, labeling, organizing, indexing, and filing documents. These services performed by SE are clerical and, as such, cannot be included in an award of attorney’s fees. RS is identified in Petitioners’ exhibits as a paralegal/legal assistant. The majority of the entries in the invoices for RS deal with receiving, reviewing, labeling, indexing, scanning, summarizing, and calendaring pleadings and orders that were received in the cases. These services are clerical and, as such, cannot be included in an award of attorney’s fees. Petitioners in Case Nos. 08-2728RX, 08-2732RX, and 08-2733RX each claimed .30 hours for RS for the following service on April 30, 2008: Received and reviewed letter from Department of Health regarding our Public Records Request dated April 28, 2008 relating to client’s case. Index document for filing and scanning for use of attorneys at hearing. However, .90 hours for reviewing and indexing a letter is not reasonable and is clerical in nature. On June 17, 2008, in Case No. 08-2730RX, RS entered .60 hours for preparing, copying, and sending a letter to the client forwarding a copy of the Order of Assignment. That entry is reduced to .30 hours, since at least half of the time appeared to be for clerical tasks. AE, who is identified as a legal assistant in Petitioners’ exhibits, has numerous entries in the invoices for receiving, indexing, filing, calendaring, and providing pleadings and orders to clients. Those services are clerical and, as such, cannot be included in an award of attorney’s fees. In Case No. 08-2728RX, PD, identified in Petitioners’ exhibits as a paralegal, made entries on June 16 and June 25, 2008, for .30 hours each. These entries were to update the litigation schedule with the hearing date. The entry is clerical and, as such, cannot be included in an award of attorney’s fees. SF, who is identified in Petitioners’ exhibits as a paralegal/legal assistant, made an entry for .30 hours in Case No. 08-2728RX on June 26, 2008, and in Case No. 08-2732RX on June 11, 2008, for forwarding orders to the client. An entry was made on July 10, 2008, in Case No. 08-2728RX and on June 18, 2008, in Case No. 08-2730RX for .30 hours for processing the retainer package. Additionally, SF had entries for organizing and filing transcripts and orders. Such services are clerical and, as such, cannot be included in an award of attorney’s fees. In Case No. 08-3488RX, SF made a .30-hour entry on June 30, 2008, for updating the parties list and document file and a .50-hour entry on June 26, 2008, for completing opening procedures. In the same case, SF made two entries on July 7, 2008, for a total of 1.5 hours for preparing a retainer package and sending it to the client. These tasks are clerical. On June 24, 2008, SF made the following .30-hour entry in 11 of the cases: “Finalize and forward Joint Motion for Continuance of Final Hearing to client in this matter.” These entries are deleted; as they represent clerical tasks and an unreasonable amount of time to finalize a motion for continuance for which GFI had charged 1.1 hours for preparing the motion. In several cases JP, identified as a law clerk, made entries on July 15, 2008, for .30-hour for creating, numbering, and copying exhibits. Such service is clerical. On July 30, 2008, PD made the following .20-hour entry in 13 of the cases: Prepare Petitioners’ Notice of Service of Second Set of Interrogatories and Certificate of Filing and Service. Prepare correspondence to Debra Loucks, attorney for Board of Pharmacy regarding filing and Service of Petitioners’ Fourth Set of Request to Produce and Second Set of Interrogatories. However, 2.6 hours is not a reasonable amount of time to prepare a notice of service of discovery and a transmittal letter to opposing counsel. A reasonable amount of time to prepare such documents is .50 hours, and the time is prorated among the 13 cases. On July 28, 2008, PD made the following .10-hour entry in 13 of the cases: Prepare Notice of Filing Videotaped Depositions of Elizabeth Ranne and Erika Lilja. Prepare draft of Notice of Filing Deposition Transcript of Elizabeth Ranne. However, 1.3 hours is an unreasonable amount of time to prepare two notices of filing depositions. A reasonable amount of time is .40 hours, and that amount is prorated among the 13 cases. On June 17, 2008, PD made the following .20-hour entry in each of the 11 cases: Prepare Petitioners’ Notice of Service of First Set of Interrogatories to Respondent and Certificate of Filing and Service. Prepare correspondence to Debra Loucks, attorney for Board of Pharmacy, regarding filing and service of Petitioners’ First Set of Request to Produce, Petitioners’ First Set of Request for Admissions and Petitioners’ First Set of Interrogatories. However, 2.2 hours is an unreasonable amount of time to prepare a notice of service of discovery and a transmittal letter to opposing counsel. A reasonable amount of time is .50, which is prorated among the 11 cases. 58. On June 21, 2008, in Case Nos. 08-2821RX, 08-2823RX, and 08-2824RX, there is a .30-hour entry for SF for finalizing and forwarding a petition for formal hearing to the Department of Health for filing. This entry does not appear to be related to the rule challenges and is deleted. In Case No. 08-3298RX, MRG made an entry of .50 hours for a telephone conference regarding the date of rule challenge and petition for rehearing. The petition for rehearing dealt with the client’s petition for waiver and should not be included. Thus, the entry is reduced to .25 hours. After all the cases were consolidated The Health Law Firm began to make entries for all cases in the first consolidated invoice. On July 28, 2008, GFI made an entry of 2.8 hours, which related exclusively to the issue of retroactive application of the rule. This entry is deleted. RS made entries in the first consolidated invoice for August 12, 14, 28, and 29, 2008, and September 2, 5, 10, and 18, 2008, relating to filing, indexing, copying, and forwarding documents. There are similar entries for SF on August 26, 2008, and September 4 and 9, 2008, and for AE on September 8, 2008. Those entries are for clerical tasks. PD had entries for reviewing, organizing, and indexing documents on September 4, 8, 11, and 17, 2008, and October 8, 2008. Those entries are for clerical tasks. There were numerous entries in August 2008 relating to a Board of Pharmacy meeting on August 21, 2008, in which the Board of Pharmacy heard motions for reconsideration of orders denying Petitioners’ petitions for waivers. Those entries are related to the petitions for waiver and not to the rule challenges. Although, The Health Law Firm makes reference to a settlement agreement in which the Board of Pharmacy agreed to grant the waivers, there was no settlement agreement of the rule challenges because the parties proceeded to litigate the issues by summary disposition. Thus, the references to attending and preparing for the August 21, 2008, Board of Pharmacy meeting as well as advising the clients of the outcome of the meeting on August 20 and 21, 2008, are deleted. Additionally, an entry by MRG on August 20, 2008, which included reviewing the August 21st agenda is reduced to .75 hours. On August 25, 2008, MRG made an entry which included a telephone conference with Mr. Bui and a telephone conference with Ms. Ranne regarding Mr. Bui. Mr. Bui is not a Petitioner, and the entry is reduced to .55 hours. Based on the invoices, it appears that Mr. Bui and Ms. Ranne were also foreign pharmacy graduates seeking waivers from the Board of Pharmacy. On August 29, 2008, MRG made another entry which included the preparation of an e-mail to Mr. Bui. The entry is reduced to two hours. On August 6, 2008, MRG made a 1.80-hour entry which included preparing e-mail to Mr. Bui and a telephone conference with Mr. Sokkan regarding the rule challenge and settlement negotiations. Neither of these persons is a Petitioner; thus, the entry is reduced to .60 hours. On August 28, 2008, TJJ made a 3.60-hour entry for researching and preparing Petitioners’ second motion to compel discovery. No such motion was filed. Thus, the entry is deleted. Another entry was made on September 2, 2008, which included, among other things, the revision of the motion to compel. That entry is reduced to .80 hours. On August 8, 2008, MRG made a 1.00-hour entry which included a telephone conference with Ms. Alameddine regarding her passing the MPJE and being licensed in Michigan. Those issues relate to the petition for reconsideration of the waiver. The entry is reduced to .50 hours. On September 4, 2008, TJJ made a .80-hour entry for preparing a letter to Mr. Modi regarding his approval to take the examination, a 1.00-hour entry dealing with Mr. Lakshminarary’s application, a .90-hour entry dealing with Petitioner Narayanan’s application, a .70-hour entry dealing with Mr. Shah’s application, and a .60-hour entry dealing with Ms. Hernandez’s application. The entries deal with the petitions for a waiver and are deleted. On September 4, 2008, MRG made an entry which included, among other tasks, time for determining if the Board of Pharmacy had sufficient funds to pay Petitioners’ attorney’s fees. This entry is reduced to two hours. On October 10, 2008, MRG made a 1.20-hour entry which included, among other things, analyzing pleadings to determine if persons who were not Petitioners should file petitions for attorney’s fees. The entry is reduced to .60 hours. On July 16, 2008, MRG and JP made entries in ten of the cases for traveling to Tallahassee and attending the depositions of Elizabeth Ranne and Erika Lilja. The total hours for MRG was 16.9 hours and for JP the total was 17 hours. These total hours are reduced by ten hours each for travel time. On August 12 and 13, 2008, MRG made entries which included travel time to attend Board of Pharmacy meetings.6 Those entries are reduced each by one hour to account for travel time. The following is a listing of the amount of hours and dollar amount for fees, which are considered to be reasonable for the rule challenges. Individual and First Consolidated Invoice Hours Rate Amount GFI 146.10 $350.00 $51,135.00 MLS 3.70 $300.00 $1,110.00 JK 1.40 $300.00 $420.00 TJJ 80.13 $200.00 $16,026.00 MRG 210.16 $150.00 $31,824.00 JP 37.80 $100.00 $3,780.00 PD 39.053 $80.00 $3,124.24 SF 16.80 $80.00 $1,344.00 GJ .40 $80.00 $32.00 RS 1.3 $80.00 $104.00 $108,899.24 The Partial Final Order found that Petitioners were entitled to an award of attorney’s fees pursuant to Subsection 120.595(3), Florida Statutes. Thus, the issue of entitlement to fees and costs pursuant to Subsection 120.595(3), Florida Statutes, was not an issue that was litigated in the instant fee cases. The issue of whether Petitioners were entitled to fees and costs pursuant to Subsections 57.105(5), 120.569(2)(e), and 120.595(4), Florida Statutes, were entitlement issues which were litigated in the instant fee cases.7 Most of the charges dealing with the petitions for fees and costs are related to the amount of fees that are to be awarded and not to the entitlement to fees. In Petitioners’ second consolidated invoice (Petitioners’ Exhibit 4), there is a two-hour entry by MLS on November 3, 2008, for research of entitlement to fees pursuant to Subsection 120.595(3), Florida Statutes. This entry is deleted since the issue of entitlement to fees pursuant to Subsection 120.595(3), Florida Statutes, had already been determined. The following entries in the second consolidated invoice relate to the litigation of the amount of fees to be awarded and are deleted: 11-5-08 GFI 6.90 hours 11-6-08 SF 7.00 hours 11-6-08 GFI 7.40 hours 11-7-08 SF 7.00 hours 11-7-08 MLS 1.00 hour 11-7-08 JCP 7.00 hours 11-8-08 JCP 1.00 hours 11-8-08 GFI 7.10 hours 1-26-09 GFI 1.00 hour 2-9-09 GFI .60 hours 2-10-09 GFI .30 hours 2-12-09 GFI .60 hours 2-17-09 GFI .30 hours 2-17-09 GFI .60 hours 2-19-09 GFI .60 hours The following entries were made in the second consolidated invoice for clerical tasks performed by paralegals and legal assistants: 11-3-08 RAS .30 hours 2-9-09 RAS .30 hours 2-10-09 RAS .30 hours 2-12-09 ACE .40 hours The issue of entitlement to fees pursuant to statutes other than Subsection 120.595(3), Florida Statutes, was a small portion of the litigation relating to attorney’s fees and costs. The major areas of litigation dealt with the amount of fees and costs that should be awarded. The invoices do not specifically set forth the amount of time that was spent on the issue of entitlement to fees on statutes other than Subsection 120.595(3), Florida Statutes. Based on a review of the pleadings in these fee cases and a review of the invoices submitted for litigation of attorney’s fees and costs, it is concluded that ten percent of the time should be allocated to the issue of entitlement to fees. The percentage is applied to the fees after the fees listed in paragraphs 76, 77, and 78, above, have been deleted. Thus, the following entries in the second consolidated invoice are reduced to the following amount of hours: 11-1-08 JCP .26 hours 11-3-08 MLS .10 hours 11-4-08 MLS .40 hours 11-8-08 JCP .32 hours 12-22-08 GFI .04 hours 12-30-08 MLS .03 hours 1-7-09 GFI .02 hours 1-14-09 GFI .04 hours 1-15-09 GFI .07 hours In the third consolidated invoice (Petitioners’ Exhibit 5), the following entries relate to the amount of fees to be awarded and are deleted: 3-4-09 SME 4.80 hours 3-4-09 GFI 1.20 hours 4-3-09 GFI 3.20 hours 4-7-09 GFI .50 hours 4-7-09 GFI .60 hours 4-7-09 GFI .30 hours 4-8-09 GFI 4.20 hours 4-8-09 GFI 1.00 hour 4-9-09 MRG 1.50 hours 4-9-09 GFI 3.20 hours 4-11-09 GFI .60 hours 4-15-09 GFI 4.40 hours On April 14, 2009, GFI made an entry which included time for travel to the expert witness’ office. The entry is reduced by .75 hours for travel time. Ten percent of the time not excluded or reduced above related to the issue of entitlement of fees pursuant to statutes other than Subsection 120.595(3), Florida Statutes. The following entries are reduced to that percentage: 3-31-09 GFI .05 hours 4-1-09 GFI .20 hours 4-6-09 GFI .19 hours 4-6-09 GFI .03 hours 4-7-09 MRG .05 hours 4-7-09 GFI .07 hours 4-7-09 GFI .19 hours 4-7-09 GFI .27 hours 4-9-09 GFI .10 hours 4-13-09 GFI .50 hours 4-14-09 GFI .48 hours 4-14-09 GFI .275 hours The following is a list of the fees in the second and third consolidated invoices which are related to entitlement of fees pursuant to Florida Statutes other than Subsection 120.595(3), Florida Statutes. Second and Third Consolidated Invoice Hours Rate Amount GFI 2.525 $350.00 $883.75 MLS .43 $300.00 $129.00 MRG .05 $150.00 $7.50 JCP .32 $100.00 $32.00 $1,052.25 With the exception of the costs related to the Transcripts of the Board of Pharmacy meetings of April 8 and 9, 2008, and June 10, 2008, Respondent, as stipulated in the parties’ Joint Pre-hearing Stipulation, does not dispute that the amounts of costs set forth in the invoices submitted by Petitioners are fair and reasonable.8 The cost of the Transcripts of the Board of Pharmacy meetings on April 8 and 9, 2008, was $1,476.00. The cost of the Transcript of the Board of Pharmacy meeting on June 10, 2008, was $524.00. At the final hearing, the Board of Pharmacy’s objection appeared to be based on the timing of the payment of the court reporter’s fees related to the transcribing of those meetings. The Transcripts were filed with the Division of Administrative Hearings prior to the issuance of the Partial Final Order. Thus, the costs of the transcribing of the Board of Pharmacy meetings are properly included in the amount of costs to be awarded to Petitioners. The amounts of the costs claimed for the rule challenges in the individual and first consolidated invoice are reasonable. The costs incurred by Petitioners for the rule challenges as set forth in the individual and first consolidated invoices are listed below: Name Amount Vipul Patel $1,773.62 Miriam Hernandez $1,801.41 Mirley Aleman-Alejo $1,213.80 Valliammai Natarajan $321.17[9] John H. Neamatalla $1,118.72 Samad Mridha $975.12 Se Young Yoon $1,097.07 Saurin Modi $1,168.75 Deepakkumar Shah, M.Ph. $1,119.24 Mijeong Chang $1,213.16 Nabil Khalil $961.32 Hadya Alameddine $464.60 Balaji Lakshminarayanan $509.71 Anand Narayanan $461.87 The total amount of costs to be awarded for the challenge to the existing rule and to the policy statements is $14,199.56. The parties stipulated to the reasonableness of the costs contained in the second consolidated invoice. The second consolidated invoice lists the total costs as $2,096.12. Therefore, the costs for the second consolidated invoice are reduced to $209.61,10 which represents the amount attributable to litigation of entitlement of fees, ten percent of the total costs. The parties stipulated to the reasonableness of the costs contained in the third consolidated invoice. The third consolidated invoice lists the total costs as $580.62. Therefore, the costs for the third consolidated invoice are reduced to $58.06,11 which represents the amount attributable to litigating the entitlement of fees, ten percent of the total costs. Petitioners incurred costs in the litigation of the amount of attorney’s fees to be awarded. Petitioners retained an expert witness, Sandra Ambrose, Esquire. Ms. Ambrose’s fee relating to the issue of attorney’s fees is $5,200.00. Her fee is reasonable; however, Ms. Ambrose’s testimony was related to the amount of the fees not to the entitlement to fees and are, therefore, not awarded as part of the costs. The total costs to be awarded for the litigation of the fees is $267.67.
The Issue The issue for determination at final hearing is whether Petitioner should be granted interim rate adjustments.
Findings Of Fact Sunrise Community, Inc. (Petitioner) is a charitable organization which serves individuals with developmental disabilities. Petitioner is a licensed Medicaid provider which owns, and/or operates Intermediate Care Facilities for the Mentally Retarded and Developmentally Disabled (ICF/MR-DD). The Agency for Health Care Administration (Respondent) is the state agency responsible for the administration and implementation of the Florida Medicaid Program. In August 1995, Petitioner submitted interim rate requests, i.e., requests for interim changes in its Medicaid reimbursement rate, for costs incurred associated with several of its facilities. The costs were incurred to comply with existing state and federal regulations. Petitioner submitted requests for the following Intermediate Care Facilities (ICFs): Sunrise Main Facility Number 285013, St. Petersburg Cluster Number 280186-01, Greentree Court Cluster Number 280283-01, McCauley Cluster Number 280208-1, Mahan Cluster Number 280291-01, Bayshore Cluster Number 280313- 01, Dorchester Cluster Number 280496-01, Cape Coral Cluster Number 285331-01, 26th Terrace (Number 12) Number 285528, County Meadows (Number 13) Number 285536, 138th Court Number 285480-00, 62nd Place Number 285471-00, 55th Court Number 285609-00, 53rd Court Number 285595-00, Wentworth Number 285617-00, Oakmont Number 285587-00, and 148th Court Number 285579-00. Reimbursement to participating ICF/MR-DD for services provided must be in accordance with Florida Title XIX ICF/MR-DD Reimbursement Plan, Version VI, dated November 15, 1994 (Reimbursement Plan). Respondent timely denied Petitioner's interim rate requests. 2/ Section III.G.7 of the Reimbursement Plan provides: After June 30, 1984, additional costs incurred after enrollment in the program that are due to capital additions or expansions must have prior approval by the HRS Office of Developmental Services if such costs exceed 1 percent of the provider's current total reimbursement rate, with the exception of the addition of new beds which are approved through the state's Certificate of Need process. Costs for specific expansion or additions that exceed the 1 percent limit shall not be reimbursable if not previously approved. Further, financing costs for approved expansions or additions shall be limited by the prudent buyer limits established in Section III.G.4. above. Section IV.G of the Reimbursement Plan provides in pertinent part: Requests for rate adjustments for increases in property-related costs due to capital additions, expansion, replacements or repairs shall not be considered in the interim between cost report submissions, except for the addition of new beds or if the cost of the specific expansion, addition, repair, or replacement would cause a change of 1 percent or more in the provider's total per diem reimbursement rate. Requests for interim rate changes reflecting increased costs occurring as a result of resident care or administration changes or capital replace- ment other than that specified in (1) above shall be considered only if such changes were made to comply with existing state or federal rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would cause a change of 1.0 percent or more in the provider's current total per diem rate. The provider must submit documentation showing that the changes made were necessary to meet existing state or federal requirements. Around February or March 1993, Petitioner's representatives discussed with the then Assistant Secretary of Development Services (DS) its plans for the ICFs, including the day centers, six-bed facilities, and office building. No costs were discussed because only the approximate costs, not the actual costs, for the projects were known at that time. The then Assistant Secretary verbally gave Petitioner's representatives approval to proceed with their plans. Following numerous public hearings, Petitioner executed leases for properties from Regional Properties, Inc., which acquired the properties through its tax exempt bond issue in October 1993. Regional Properties is a not-for- profit corporation, exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. Subsequently, a new Assistant Secretary took the helm of DS. Around March 1994, Petitioner representatives met with the new Assistant Secretary and discussed the ICF projects with him. He advised Petitioner's representatives to continue with the projects. Respondent required that the costs be incurred before requesting reimbursement. Petitioner submitted interim rate adjustment requests for the costs associated with the ICF projects. Medicaid had received approval from DS for the property items in the interim rate requests. Since the requests involved items which were required as part of the ICF/MR-DD program, DS took the position that it could not disapprove the requests. The Assistant Secretaries of DS did not give Petitioner written prior approval for the costs associated with the projects. However, although not written, the new Assistant Secretary did give prior approval for the costs. This finding is consistent with the approval of all of Petitioner's requests for interim rate adjustments (for reimbursement) of the costs associated with the projects submitted during the tenure of the new Assistant Secretary. In 1995, the new Assistant Secretary of DS was replaced by the present Acting Assistant Secretary. The present 1995 interim rate adjustment requests are a continuation of costs associated with the ICF projects which have already been approved. The identification of costs, as for capital additions or expansions, by a provider is accepted and not questioned or challenged by DS. The costs in the 1995 interim rate requests were accepted by DS. The costs in the 1995 interim rate change requests were considered by DS to be a continuation of costs for the ICF projects previously approved. As a result, the Acting Assistant Secretary of DS took the position that DS could not disapprove the requests. Written prior approval was not required by DS prior to Petitioner's 1995 interim rate change requests. Petitioner was entitled to rely upon the terms of the Reimbursement Plan and the past practice of Medicaid, DS, and Respondent regarding prior approval. In reliance on the past practice, Petitioner proceeded and continued with the ICF projects and incurred costs associated with the projects. Petitioner leases properties from Regional Properties, Inc. The Phineas Corporation controls both Petitioner and Regional Properties. Petitioner leases the properties from a "related" party or organization. The lease payments are not costs for capital additions or expansions under the Reimbursement Plan. Repairs and replacements are not capital additions or expansions under the Reimbursement Plan. Each facility must be evaluated separately regarding capital additions or expansions in terms of the 1 percent requirement of Section III.G.7 of the Reimbursement Plan. In the 1995 interim rate adjustment requests, there are no capital additions or expansions beyond those identified by Petitioner in its requests. The 1 percent requirement of Section III.G.7 does not apply to any of Petitioner's 1995 interim rate adjustment requests. The costs submitted by Petitioner in the 1995 interim rate adjustment requests are reasonable and necessary and are, therefore, allowable subject to audit.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order granting Petitioner's interim rate adjustment requests submitted in August 1995, subject to auditing. DONE AND ENTERED this 5th day of August 1996, in Tallahassee, Leon County, Florida. ERROL H. POWELL, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of August 1996.
Conclusions Having reviewed the Amended Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1, The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Amended Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $16,000.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed February 20, 2014 9:56 AM Division of Administrative Hearings 3. Conditional licensure status is imposed on the Respondent beginning on June 21, 2013 and ending August 31, 2013. ORDERED at Tallahassee, Florida, on this_19_ day of FOoeear 2014, izdbpth Dud > Secretary enzy for Héglth Care Administration NOTICE OF RIGHT TO JUDICIAL REVIEW. A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and iyo! of this Final Order was served on the below-named ayo A , 2014. persons by the method designated on this / Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Thomas J. Walsh II George R. Huffman, Esq. Office of the General Counsel Qualified Representative Agency for Health Care Administration Consulate Health Care (Electronic Mail) 5102 West Laurel Street, Suite 700 Tampa, Florida 33607 (U.S. Mail)
Findings Of Fact Background Respondent, Department of Health and Rehabilitative Services (Department), is the designated state agency responsible for the administration of Medicaid funds under Title XIX of the Social Security Act. Rule 10C- 7.048(2)(a), Florida Administrative Code. Petitioner, Richmond Healthcare, Inc., d/b/a Sunrise Health Center, owns and operates a 240-bed nursing home in Broward County, Florida, and is a participant in the Florida Medicaid Program. As a participant, petitioner is required to submit annual cost reports to the Department. Based on these cost reports, the Department establishes a participant's reimbursement rate. Rules 10C-7.048(4)(a)5 and 10C-7.048, Florida Administrative Code. The annual cost reports are subject to audit at the discretion of the Department. If audited, a direct examination of the participant's books, records and accounts that support the amounts reported in the annual cost report is made to determine the correctness and propriety of the amounts claimed in the cost report. Rule 10C-7.0481, Florida Administrative Code. Pertinent to this case, the Department elected to audit petitioner's cost reports for the period of October 5, 1983, through December 31, 1984. Based on such audit, the Department issued an audit report that disallowed certain costs claimed by petitioner, and proposed to recoup the excess Medicaid payments made to petitioner as a consequence of such disallowance. Petitioner filed a timely protest to contest the Department's decision. The parties' joint stipulation At hearing, the parties stipulated as follows: The parties have recalculated the usual and customary charges at $65.72 per day. The Department of Health and Rehabilitative Services will reclassify costs of $8,282.00 from the capitalized minor equipment to the operating and patient care component. The Department of Health and Rehabilitative Services will reclassify construction period interest to start-up costs from the date of certificate of occupancy to the date of the admission of the first resident to the nursing home. Amortization of this amount for the 15 months ended December 31, 1984, cost reporting period totaled $27,677.00. The adjustment to indirect home office costs will remain as in the audit report. The parties agree that the property ceiling issue will be remanded to the Department of Health and Rehabilitative Services for an informal hearing. All arguments will be presented in writing to the informal hearing officer. Oral argument will be permitted at the request of either party. The parties further agree that the written arguments will be due on the same date that the Proposed Recommended Order is due in the companion rule challenge case. If the rule challenge is dismissed, the parties will file briefs and hold oral argument, if requested, within fifteen (15) days of its dismissal. The parties agree that the only remaining disputed issue in the Petition filed in this matter is the allowable expense for private airplane usage. The expenses for private airplane usage. In rendering its annual cost report, a participant, such as petitioner, is bound by the following provisions of law or contract: Rule 10C-7.48(4), Florida Administrative Code, which provides: (4) Provider Eligibility. (a) Nursing home providers participating in the Medicaid Nursing Home Program shall: * * * Have a Medicaid reimbursement rate established. The provider shall submit a cost report in compliance with the provisions of the Florida Title XIX Long Term Care Reimbursement Plan, as revised April 1, 1983, and subsequently amended January 1, 1984, adopted by reference. The cost report shall be analyzed and a reimbursement rate established in accordance with the Florida Title XIX Long Term Care Reimbursement Plan, as revised April 1, 1983, and subsequently amended effective January 1, 1984. The Florida Title XIX Long Term Care Reimbursement Plan, which provides: * * * Cost Finding and Cost Reporting All providers are required to detail all of their costs for their entire reporting period, making appropriate adjustments as required by this plan for determination of allowable costs. . . . The cost report must be prepared by the facility's independent Certified Public Account, on the forms prescribed by the Department, and on the accrual basis of accounting in accordance with generally accepted accounting principles as established by the American Institute of Certified Public Accountants (AICPA), the methods of reimbursement in accordance with Medicare (Title XVIII) Principles of Reimbursement, the Provider Reimbursement Manual (HIM-IS) except as modified by the Florida Title XIX Long Term Care Reimbursement Plan, and State of Florida Administrative Rules. * * * G. All providers are required to maintain financial and statistical records in accordance with 42 CFR 405.453(a), (b, (c), (e). The cost report is to be based on financial and statistical records maintained by the facility. Cost information must be current, accurate, and in sufficient detail to support costs set forth in the report. This includes all ledgers, books, records, original evidence of cost and other records in accordance with HIM-IS which pertain to the determination of reasonable costs, and must be capable of and available for auditing by State and Federal authorities. . . . (Emphasis added) * * * III. Allowable Costs * * * C. Implicit in any definition of allowable costs is that those costs should not exceed what a prudent and cost-conscious buyer pays for a given service or item. . . . HIM-IS, which provides: 2100. PRINCIPLE All payments to providers of services must be based on the "reasonable cost" of services covered . . . and related to the care of beneficiaries. . . . * * * 2102.1 Reasonable Costs... It is the intent of the program that providers will be reimbursed the actual cost of providing high quality care. Implicit in the intention that actual costs be paid to the extent they are reasonable is the expectation that the buyer seeks to minimize its costs and that its actual costs do not exceed what a prudent and cost-conscious buyer pays for a given item or service. . . . 2102.2 Costs Related to Patient Care.-- These include all necessary and proper costs which are appropriate and helpful in developing and maintaining the operation of patient care facilities and activities. Necessary and proper costs related to patient care are usually costs which are common and accepted occurrences in the field of the provider's activity. . . . * * * 2103. PRUDENT BUYER General.--The prudent and cost-conscious buyer not only refuses to pay more than the going price for an item or service, he also seeks to economize by minimizing cost. . . . * * * 2304. ADEQUACY OF COST INFORMATION Cost information as developed by the provider must be current, accurate, and in sufficient detail to support payments made for services rendered to beneficiaries. This includes all ledgers, books, records and original evidences of cost (purchase requisitions, purchase orders, vouchers, requisitions for materials, inventories, labor time cards, payrolls, bases for apportioning costs, etc.), which pertain to the determination of reasonable cost, capable of being audited. (Emphasis added) On audit, petitioner provided no books, records or accounts to support the amounts reported in its annual cost report for expenses associated with private airplane usage. Under the circumstances, the Department properly disallowed such costs since their propriety and correctness was not substantiated by petitioner. At hearing, petitioner offered no proof regarding the correctness or propriety of the subject costs, but relied upon the proof offered on behalf of intervenor, Thelma R. Allgood. Ms. Allgood was, at all times material hereto, an owner of 50% of petitioner's stock, and was, after its sale to third parties, contractually obligated to assist and cooperate with petitioner to document the subject claim. At hearing, the proof offered on behalf of intervenor demonstrated that during the period of October 5, 1983, through December 31, 1984, petitioner had contracted with Allgood Healthcare, Inc., which was located in Augusta, Georgia, to provide all of the customary and necessary management services for petitioner. During this period, Ms. Allgood, in addition to owning 50% of petitioner's stock, was, along with her husband, Thomas Allgood, the sole owner of Allgood Healthcare. In view of this community of interest, Allgood Healthcare was considered a home office of petitioner for cost reporting purposes. Between October 5, 1983, and December 31, 1984, Allgood Healthcare used its private plane on 42 occasions to fly Mr. and Mrs. Allgood, as well as other personnel of Allgood Healthcare, to or from petitioner's facility in Broward County, Florida, and the home office in Augusta, Georgia, as well as the cities of Savannah and Atlanta, Georgia. The expenses for these trips totaled $41,228.26, and included aircraft operation costs, pilot charges, pilot's expenses, and fuel. On average, the cost of each trip was approximately $940. 1/ During the same time-frame, the cost for a round trip economy fare ticket between Augusta and Fort Lauderdale by commercial airline was approximately $430. To demonstrate its entitlement to claim the expenses for private airplane usage on its costs report, it was incumbent upon petitioner to demonstrate that such costs were reasonable and related to patient care. Petitioner has failed to demonstrate either prerequisite. The only proof offered to demonstrate that the subject costs were related to patient care was through the testimony of Mr. Allgood. Mr. Allgood, admittedly a person with no knowledge of patient care or cost reporting, accompanied his wife on approximately one-half of the subject trips and opined that the purpose of those trips, as well as those on which he had no personal involvement, were related to patient care. Mr. Allgood was, however, unable to recall any specific trips he made; any dates he, his wife, or any other specific person were on the premises; or what precisely was done at any particular time that would demonstrate that the trip was related to patient care. Under the circumstances, Mr. Allgood's testimony is not persuasive, and his conclusion that the subject costs for private airplane usage were related to patient care is not credited. 2/ Regarding the reasonableness of the expenses incurred, the proof demonstrated that the cost per trip for use of the private plane was $940, while the cost for a round trip ticket by commercial airline was $430. To support the reasonableness of this expense, intervenor again offered the testimony of Mr. Allgood, who opined that where two passengers were on a trip, the cost was comparable to commercial travel. Mr. Allgood's testimony was, however, unpersuasive to demonstrate the reasonableness of the cost to patient care. Notably, Mr. Allgood, who admitted performing no services related to patient care, accompanied his wife on approximately one-half of the trips. Under such circumstances, his presence was unnecessary, and the costs for transporting Ms. Allgood by private plane, even assuming she performed services related to patient care, were unreasonable. With respect to the remaining trips, Mr. Allgood was shown to have no personal knowledge regarding those trips, and his testimony that at least two passengers were present on each of those trips is not credited. In fact, to the extent proof is available, it indicates that a number of trips were made with only one passenger, and that on several occasions the expense of a trip, ostensibly a round trip (Augusta-Fort Lauderdale- Augusta), were incurred to transport one or two passengers in one direction only.
Recommendation Based on the foregoing findings of fact and conclusions of law it is RECOMMENDED that: Petitioner's protest of the Department's disallowance of the expenses associated with private airplane usage as Medicaid resident costs be dismissed, and Upon review of the property ceiling issue which is hereby remanded to the Department, that it enter a final order consistent with its findings on that issue, the parties' stipulation, and the recommendation contained in this order. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 19th day of January, 1989. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1050 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of January, 1989.
